Click Here for Data about Rochester and Prop 2 1/2
Proposition 2 1/2 was enacted in 1980 and took effect in Fiscal Year 1982. It was place on the statewide ballot by petition and passed by the voters. The law limits the amount of tax a municipality can collect in real and personal property taxes in a year. You can’t expect the state legislature to ever place limits on the amounts your taxes can be increased. This limit is known as the Levy Limit and it can only be increased by 2½% per year. This 2½% increase is automatic. "New growth" is also added to the Levy Limit. New growth is any additions to assessed value of properties. Think new buildings and additions/renovations. It is different than revaluation.
The amount collected in taxes is known as the Levy. How much is the average single family tax bill for Rochester? A municipality may choose to collect less than the Levy Limit. This will not affect the increase in the Levy Limit though. If you take the Levy Limit and subtract the Levy, the result is known as Excess Levy Capacity
There are a few ways municipalities can collect more than the Levy Limit. These are known as General Overrides, Underrides and Debt Exclusions. Any of the exceptions must be approved at town meeting and then approved at the ballot. How much debt does Rochester Have?
General Overrides are additional taxes added to the Levy Limit. They are permanent additions to the Levy Limit. They must be presented in dollar terms and specify a purpose. The funding is usually for recurring expenses. For example if a General Override was approved for $1 million to fund town employee salaries, the extra $1 million collected that year would go towards that purpose. The catch is that the next year the extra $1 million collected could be spent on anything the town budgets it for. What you are voting on, is the ability for the town to collect an additional amount over the levy limit. Remember this additional amount collected is PERMANENTLY added to the Levy Limit.
A Debt Exclusion is a specific amount that the town borrows for a specific project. It is a temporary addition to the Levy Limit. Examples of this are new buildings, new equipment, building renovations,etc. The money is borrowed over a certain amount of time and paid back with interest by collecting additional taxes over the Levy Limit. When the amounts borrowed are repaid, then the extra tax collections stop. The important thing to remember when looking at Debt Exclusions are the amount proposed to borrow is not the total amount you will have to pay. Interest is added on.
A Underride is an amount subtracted from the Levy Limit. It is a permanent reduction to the Levy Limit. You will not see an Underride vote often, if ever. A few municipalities have successfully passed Underrides.
Does the town choose to collect to the Levy Limit? Sure Looks like it
Note that this is total money spend from the General Fund. The General Fund's primary source of funding is tax revenue of real and personal property
As debt is paid off you won't really notice a drop in property taxes though because of the 2 1/2% increase every year.